Op-ed: Do Vermonters want radical change in education?

By Jack Hoffman

Now that the state House of Representatives has passed an education reform plan, it will be easy to get bogged down in the minutiae that differentiate it from Gov. Phil Scott’s “Education Transformation Proposal.” But before Vermonters get lost in the weeds debating these proposals, they might want to ask themselves if they support the radical change that both plans represent:

• Are they ready to abandon the idea that taxation for public education should be based on residents’ ability to pay and that a person’s income is the fairest measure of that ability?
• Are they ready to take control of education spending away from local voters and cede it to the Agency of Education?

Return to property-based taxation

For more than 25 years, the funding system has recognized that taxing people according to ability to pay was the fairest way to share the cost of educating our children. And a homeowner’s income, rather than the current selling price of the house, has been viewed as a more accurate measure of a person’s ability to pay taxes.

Under the current system, about two-thirds of resident homeowners pay some or all of their school taxes based on their income. There are problems with the current system, despite efforts to go to a simple income-based school tax for all residents. But the biggest flaw is that the wealthiest Vermonters are taxed on their home value, not their income. That means the wealthy pay less of their income to support education than do typical homeowners making $80,000 or $90,000 a year. The wealthiest 30 percent of homeowners get about 60 percent of Vermont’s adjusted gross income, but don’t pay school taxes based on that income.

Instead of addressing this imbalance, both the administration and the House want to revert to a property-based school tax system, locking in this break for wealthy homeowners.

The administration and House each propose some form of “homestead exemption.” The exemptions would be tied to household income and exclude a portion of home value from taxes. But adjusting house values according to the owner’s income bracket is not the same as taxing income.

The market value of the house, not the homeowner’s income, would ultimately determine the tax. Homeowners on fixed incomes would once again be vulnerable to changing real estate prices. And homeowners with the same income but different house values, in districts with the same per-pupil funding, would not pay the same taxes, as they do now.

Consolidated control of spending

The governor and legislature complain that Vermont spends too much on education for the results it gets, although some districts are criticized for not spending enough. The feeling is that local voters don’t make sound spending decisions—even though they are voting on their own taxes and how to spend the state’s—i.e. their own—money.

Recent reforms were supposed to save money and improve student performance: school consolidation, a new special education funding formula, a new weighting system to direct funding to certain students. But when education spending jumped this year — because of Covid, inflation, healthcare, and mistakes in implementing the new weights — it provided Montpelier an opportunity to change the funding system and take away local voters’ control.

The legislature and the governor want further consolidation despite the failure of Act 46, the first consolidation law, to achieve promised results. The governor proposed five mega-districts. While that was too few for the House, 20 might be enough. But large districts, coupled with the new approach to funding, may further alienate voters and discourage democratic participation.

The governor and House each proposed foundation-type funding systems. Essentially, a per-student “foundation amount” would be allocated to all students. The foundation grants may be supplemented for students needing additional funding. But whether it’s the governor’s model or the legislature’s, we can expect the actual calculation of the foundation amount and ancillary adjustments to be generated at the Agency of Education by a consultant-designed computer program, not unlike the database and program used to generate Vermont’s new pupil weighting system a couple of years ago.

A single, base amount of funding that works across the state seems to fly in the face of what we learned about cost increases districts incurred this year. Staffing shortages and demand for mental health services, for example, hit some budgets harder than others. How would a foundation amount allow for that kind of variability or the preferences of Vermont’s diverse communities?

The governor and legislature are pressing ahead with a new tax and funding system long before the Commission on the Future of Public Education in Vermont has completed its work or even heard from people across the state. They are pressing ahead without fixing the unfairness of the current system that favors wealthy homeowners. And they are pressing ahead even though a foundation formula, while it may reduce funding to schools, doesn’t reduce the costs that drove up education spending this year.

If the past decade of reforms taught us anything, it’s that these big changes don’t always live up to their promises and come with unintended, often negative, consequences.

Jack Hoffman is senior analyst at Public Assets Institute, a non-partisan, non-profit organization based in Montpelier. He is a resident of Marshfield currently living in France.